The three vertebrate TET genes encode 5-methylcytosine (5mC) hydroxylases that catalyze the transition of 5mC to 5hmC, resulting in the elimination of the methyl mark on DNA. DNA methylation in Drosophila is controversial and recent genome-wide bisulfide sequencing did not uncover any methylated cytosine. However, Drosophila has one essential TET homolog that modifies RNA. We show that hydroxymethylcytosine preferentially marks polyadenylated RNAs and is deposited by Tet in Drosophila. The transcriptome-wide hydroxymethylation landscape revealed hydroxymethylcytosine on transcripts of many genes expressed during neuron development. Tet and hydroxymethylated Cytosine mRNAs 5hmrC are most abundant in the larval brain, and Tet-deficient larvae have impaired locomotion behavior and brain development, accompanied by decreased RNA hydroxymethylation. This study highlights the distribution, localization, and function of cytosine hydroxymethylation and identifies central roles for this modification in Drosophila. Our findings open new research prospects in an emerging realm of biological regulation: epitranscriptomics.